Who Should You Hire First for Your SaaS: An AE or an SDR?

You’ve developed an incredible SaaS product, and now it’s time to scale. 

But here’s the challenge: should you hire an Account Executive (AE) to close deals, or a Sales Development Representative (SDR) to generate leads? 

It’s one of the most common dilemmas SaaS businesses face when building their sales teams – AE vs SDR. 

Make the wrong hire at the wrong time, and you risk bottlenecking your growth. But get it right, and you’ll supercharge your sales funnel. 

Well, I have built my fair share of teams – both sales and customer service in the past 20 years of my career.

So, if I say this, I say this from experience – when to hire an AE and when to hire a SDR, and what value do they bring to the table for your SaaS sales team.  

What is an Account Executive (AE)?

An Account Executive (AE) is responsible for closing deals and driving revenue. Once a lead has been qualified (usually by an SDR), the AE takes over. 

Their job is to build relationships, understand customer pain points, and offer tailored solutions to finalize the sale.

#TCCRecommends: How to Turn an SQL into a Customer?

Key Responsibilities of an AE

• Delivering product demos and presentations.
• Negotiating contracts and pricing.
• Managing long-term relationships with key accounts.
• Closing deals and driving revenue growth.

Key Skills of an AE

• Strong negotiation skills.
• Consultative selling expertise.
• Deep understanding of customer needs.
• Excellent communication and relationship-building abilities.

Value of an AE to SaaS Businesses

AEs play a critical role in SaaS growth, particularly when your product involves a consultative or complex sales process. They ensure prospects move smoothly through the middle and bottom of the sales funnel.

For Example: A SaaS company offering enterprise-grade marketing tools might rely heavily on AEs to close six-figure contracts with Fortune 500 companies.

What is a Sales Development Representative (SDR)?

A Sales Development Representative (SDR) is the frontline of your sales team. Their primary responsibility is to identify potential customers and qualify leads for the AE team. 

SDRs focus on the top of the sales funnel, ensuring your pipeline is always full.

Key Responsibilities of an SDR

• Conducting cold calls and sending outreach emails.
• Qualifying leads based on specific criteria.
• Scheduling meetings or demos for AEs.
• Managing and updating CRM data.

Key Skills of an SDR

• Persistence and resilience in prospecting.
• Strong communication skills for outreach.
• Analytical abilities to qualify leads effectively.
• Familiarity with sales tools like LinkedIn Sales Navigator, Outreach.io, and HubSpot.

Value of an SDR to SaaS Businesses

SDRs are essential for SaaS companies that want to scale their sales pipelines. They free up AEs to focus on closing deals instead of prospecting.

For Example: A SaaS startup targeting SMBs in a crowded market might rely on SDRs to identify decision-makers and book demos.

Where Do AEs and SDRs Fit in Your SaaS Sales Funnel?

To decide who to hire first, it’s crucial to understand where AEs and SDRs operate in the SaaS sales funnel:

• Top of Funnel (TOFU): SDRs excel here. They identify, reach out to, and qualify leads, ensuring your pipeline stays full.
• Middle and Bottom of Funnel (MOFU & BOFU): AEs take the baton here. They manage relationships, deliver demos, and close deals.

Visualizing the Process:

1. SDR: Prospect → Qualify lead → Schedule meeting.
2. AE: Conduct demo → Negotiate terms → Close the deal.

When to Hire an AE: Key Indicators

1. Your Pipeline Is Overflowing

If your inbound or marketing-qualified leads (MQLs) are piling up and no one is following through, it’s time to hire an AE.

For Example: A SaaS platform with a freemium model sees hundreds of users upgrade to paid trials every month. An AE can turn those upgrades into long-term contracts.

2. You Have Complex or High-Value Deals

When your product involves a longer sales cycle, multiple decision-makers, or higher price points, AEs are essential.

For Example: A SaaS analytics company targeting enterprise clients found that AEs were instrumental in closing deals worth $250,000 annually.

#TCCRecommends: How to Optimize Your Sales Cycle?

When to Hire an SDR: Key Indicators

1. Your Pipeline Needs Filling

If your AEs—or you—spend most of their time prospecting, it’s time to hire an SDR. 

They’ll focus on top-of-funnel activities, freeing up AEs to close deals.

For Example: A SaaS HR platform saw a 35% increase in closed deals after adding SDRs to pre-qualify leads.

2. Early-Stage SaaS Growth

For startups, building a pipeline is often the biggest challenge. 

SDRs help you establish an outreach process and test market segments.

Pro Tip: If budget constraints are an issue, consider outsourcing SDR functions or leveraging tools like Outreach.io to augment your efforts.

Aligning Hiring Decisions for AE vs SDR With SaaS Growth Stages

1. Early-Stage SaaS

Focus on SDRs to create and nurture your pipeline. An AE may be unnecessary if you don’t have enough leads yet.

2. Growth-Stage SaaS

When your pipeline is consistent, hire both SDRs and AEs to balance lead generation and deal closures.

3. Mature SaaS Companies

Specialization becomes key. Consider vertical-specific teams (e.g., healthcare, finance) and roles like Sales Enablement to support your AEs and SDRs.

#TCCRecommends: Difference Between Sales Enablement vs Sales Engagement

Common Pitfalls to Avoid to Hire AE vs SDR

1. Hiring an AE Before Generating Leads
   Without a solid pipeline, AEs will struggle to meet targets.
2. Expecting SDRs to Close Deals
   While SDRs can build relationships, closing complex deals is outside their scope.
3. Overloading AEs With Prospecting Tasks
   This dilutes their ability to focus on revenue-generating activities.

Case Study: Scaling a SaaS Startup with AEs and SDRs

Company: SaaS FinTech Startup
Problem: The team struggled with lead generation and closing deals simultaneously.
Solution: Hired two SDRs first to qualify leads, followed by one AE to close deals.
Outcome: A 60% increase in revenue within six months.

FAQs

1. Should I hire both an AE and SDR at the same time?

Not always. Start with the role that addresses your immediate bottleneck. If leads are plentiful, hire an AE. If you’re struggling to generate leads, hire an SDR.

2. What’s the salary difference between an AE and an SDR?

• AE Salary: $70,000 to $120,000 annually (plus commission).
• SDR Salary: $50,000 to $75,000 annually (plus bonuses).

Conclusion

Deciding between an AE vs SDR depends on your SaaS business’s growth stage and immediate needs. 

Start by analyzing your sales funnel. 

Is your pipeline full but deals aren’t closing? Go for an AE. Is your pipeline empty? Bring in an SDR.

If you’re still unsure, let’s chat. As a fractional Chief Sales Officer, I specialize in helping SaaS companies like yours build high-performing sales teams. Let’s get your growth on track!